- IMF Lowers Global Growth Forecast Again
The International Monetary Fund once again lowered global growth projection for 2019 and 2020.
The fund projected that global economy will grow at 3.2 percent in 2019 and 3.5 percent in 2020, 0.1 percent below April projections.
In the fund’s World Economic Outlook released on Tuesday in Washington, it said policy missteps on trade and Brexit uncertainty could hurt expected rebound in growth this year.
It also lowered global volume of trade to 2.5 percent this year, 0.9 percent lower than April projection.
“The projected growth pickup in 2020 is precarious, presuming stabilization in currently stressed emerging market and developing economies and progress toward resolving trade policy differences,” the IMF said.
The fund noted that since the last forecast in April, both the US and China have increased tariffs on goods, hence further plunging global growth and increasing global risk.
Growth in volumes could return to 3.7 percent in 2020 if global trade tensions are properly handled.
“The principal risk factor to the global economy is that adverse developments — including further U.S.-China tariffs, U.S. auto tariffs, or a no-deal Brexit — sap confidence, weaken investment, dislocate global supply chains, and severely slow global growth below the baseline,” the IMF said.
IMF cut China growth projection for 2019 to 6.2 percent and 6 percent in 2020. This was after the second-quarter GDP report showed the world’s second-largest economy grew at a 27-year low of 6.2 percent.
However, the fund raised the US growth rate by 0.3 percent to 2.6 percent, citing better than expected first quarter’s result. The 2020 growth projection of 1.9 percent was unchanged for the world’s largest economy.